Skip to content

ACCA Strategic Professional · Advanced Taxation (UK) · Corporation tax: taxable total profits

Which of the following is correctly included in a UK-resident trading company's taxable total profits for an accounting period?

A company's chargeable gains, net of allowable capital losses, form part of its total profits and are charged to corporation tax. Companies do not pay capital gains tax or get the annual exempt amount, and UK dividends received are generally exempt.

  1. ADividends received from UK companies, as they are taxed at 8.75% in the company's hands
  2. BChargeable gains, after deducting any allowable capital losses, as part of total profitsCorrect
  3. CThe annual exempt amount of £3,000 deducted from chargeable gains
  4. DTrading profits only, with chargeable gains taxed separately under capital gains tax

Explanation

A company has no capital gains tax. Its chargeable gains, net of allowable capital losses, are included in total profits and taxed at corporation tax rates. The annual exempt amount is available only to individuals, and dividends from UK companies are generally exempt, not taxed at 8.75%.

Did you get it right without looking?

One question tells you little. A timed set on Corporation tax: taxable total profits shows your real accuracy, how long you take and where you lose marks.

Practise Corporation tax: taxable total profitsFree diagnostic mock

More Corporation tax: taxable total profits questions